India’s fiscal deficit quadrupled from a year ago to Rs 1.6 lakh crore in the first quarter, in line with the Reserve Bank of India’s (RBI) apprehensions.
Against the government’s optimism that it will rein in fiscal deficit at 4.6 per cent of gross domestic product (GDP) for this financial year, the deficit has already reached 39.4 per cent of the target in three months. At this point of time last year, it was 10.5 per cent of the 2010-11 target.
Analysts expect it would be difficult for the government to bring fiscal deficit below five per cent of GDP for 2011-12. Last year, the government was able to contain fiscal deficit at 4.7 per cent of GDP, against the original target of 5.5 per cent and the revised target of 5.1 per cent.
“The fiscal deficit for 2011-12 cannot be less than five per cent,” D K Joshi, chief economist, Crisil, said.
The gap between the government’s expenditure and revenue widened during April-June, because receipts did not keep pace with last year’s numbers, boosted by one-time revenue gain from the 3G spectrum auction.
Non-tax revenue, the head under which spectrum sale proceeds come, was down ten times to Rs 12,221 in April-June. Even tax revenue fell short of last year’s collections. It stood at Rs 78,699 crore, compared to Rs 83,994 crore in the same period last year.
The government was able to contain its expenditure just above last year’s figures. Its outlay stood at Rs 261,217 crore, slightly more than Rs 242,208 crore.
Chief economic advisor Kaushik Basu had yesterday called it a challenge to achieve the fiscal deficit target of 4.6 per cent, but said the government was serious in achieving it.
In its monetary review, RBI had blamed the large fiscal deficit the key source of demand pressure, complicating the taming of inflation.
